This month marks the 75th anniversary of the publication of Keynes’s The General Theory of Employment, Interest, and Money. This column examines the book’s influence today. It argues that the General Theory was a flawed idea whose time had come.

Economics lacks an anchored understanding of the nature of the reality that economics is supposed to illuminate. This column, which introduces a new CEPR Policy Insight, says that instability of leverage, connectivity, and the potential instability of the price level have all been neglected in stable-with-frictions macro theory. Technical innovations will not bring real progress as long as “stability-with-frictions” remains the ruling paradigm. Meanwhile, governments are not prepared to face another crisis.

Do the US and Europe risk repeating Japan’s lost decade? This column warns that if the US or European financial clean-ups falter, they will be vulnerable to recurring financial crises. It argues that macroeconomic models should not treat finance as an innocuous veil and calls for a new approach that places financial intermediaries at the centre of its models.